Councils in Scotland are typically spending less than a fifth of their annual procurement budget with local SMEs, according to the Federation of Small Businesses (FSB).
The FSB is urging Scotland’s incoming council administrations to pledge to increase spending with local firms.
Scotland’s 32 local authorities spend over £6.1bn a year sourcing goods and services but statistics show the average council spent only 19.7% of their procurement budget with smaller firms in their area in 2015-16.
The figures came from the Improvement Service – the national organisation tasked with improving local government.
The FSB said there was great variation in the amount Scottish councils spent on local SMEs.
West Dumbartonshire spent just 5.8% of its budget on SMEs in its area. However, Shetland Islands came in at the other end of the spectrum, using more than half of its spending power, 53.6%, to boost the local economy.
The FSB said it understood why smaller councils are likely to have lower levels of local procurement but even all of Scotland’s city councils, with the exception of Aberdeen, spend less than one pound in four with local SMEs.
Andy Willox, FSB’s Scottish policy convenor, said: “Council budgets are under significant pressure. That’s why it is important that they squeeze every drop of value out of their spending power by targeting it on their local economies.
“We’re calling on every Scottish council to increase their spending with local firms by 2%, delivering a £600m boost to Scottish business by 2021.”
Willox said most SMEs had far more contact with their local authority than central government and added that strong partnerships between councils and business communities were more important than ever.
An estimated 348,000 SMEs operate in Scotland – accounting for 99.3% of all businesses and providing around 1.2m jobs.
☛ Want to stay up to date with the news? Sign up to our daily bulletin.